Foro 1

Article
Entrepreneurship Theory and
Entrepreneurial Leaps: Practice

2022, Vol. 46(4) 9 52–984
Growth Processes in
© The Author(s) 2020
Article reuse guidelines:
sagepub.com/journals-permissions
Transition Phases Between DOI: 10.1177/1042258720929890
journals.sagepub.com/home/etp
Dynamic States
Dietmar Sternad1 and Gernot Mödritscher2
Abstract
We use a multiple case study approach to investigate “entrepreneurial leaps,” transition phases
between dynamic states in which entrepreneurial action focused on reconfiguring key elements
of the business model allows a firm to tap into new pools of resources through accessing and
exploiting new market. Based on an analysis of 24 cases from three European countries, we
derive a general process model of entrepreneurial leaps and identify four different patterns of
how these transitions typically unfolds. The combination of dynamic states and entrepreneurial
leaps can be used as a general framework for explaining nonlinear growth processes in firms.
Keywords
growth process, dynamic states, firm growth, business model innovation, adaptive tension
For decades, process models of firm growth have typically assumed that firms pass through a
number of largely predictable sequential stages. Levie and Lichtenstein (2010) actually identi-
fied over a hundred stage models that were proposed in the literature during the period between
1962 and 2006. The stages theories have, however, recently been subjected to criticism following
concerns about their empirical validity and generalizability (Brown et al., 2017; Harbermann &
Schuilte, 2017; Phelps et al., 2007). Levie and Lichtenstein (2010) even claimed to have made a
“terminal assessment of stages theory” (p. 317) and concluded that “all of them are based on
inaccurate assumptions about the firm” (p. 336), specifically assumptions related to the concep-
tualization of firms as “organisms” that grow and mature—in analogy to human beings—in a
predetermined order according to a sort of immanent or “genetic” program.
The notion of a standard linear sequence of stages is challenged by newer theories that build
on principles from complexity science (Anderson et al., 1999; Harbermann & Schuilte, 2017;
Lichtenstein, Carter et al., 2007; Lichtenstein, 2016; McKelvey, 2004, 2016). These approaches
suggest that the growth processes of firms are nonlinear, follow different development patterns,
and are contingent on an interplay of various internal and external forces that together determine
1
Carinthia University of Applied Sciences, Europastrasse 4, A-9524 Villach, Austria
2
University of Klagenfurt, Universitätsstrasse 65-67, A-9020 Klagenfurt am Wörthersee, Austria
Corresponding Author:
Dietmar Sternad, Carinthia University of Applied Sciences, Europastrasse 4, Villach, Carinthia A-9524, Austria.
Email: d.sternad@fh-kaernten.at
Sternad
2 and Mödritscher 953
Entrepreneurship Theory and Practice 00(0)
a firm’s options for exploration and exploitation (Brown & Mawson, 2013; Garnsey et al., 2006;
Ingley et al., 2017; Phelps et al., 2007).
One of the most salient nonlinear models of the development of a firm is the dynamic states
approach (Levie & Lichtenstein, 2010). According to this approach, entrepreneurs or managers
create effective links between the internal value creation system of a firm and external opportu-
nities that allow a firm to leverage business opportunities and create value for customers, which,
in turn, enables the firm to obtain the resources that are necessary for its continuing survival and
thriving (Levie & Lichtenstein, 2010, p. 334). Following this approach—in extension of the
perspective of typical stage models—dynamic states can appear in any sequence, thus allowing
different growth patterns to emerge.
Levie and Lichtenstein (2010) clearly describe the nature of a dynamic state (in which entre-
preneurial actions are focused on creating an efficient and effective match between a business
model and the market potential) and propose different ways in which organizations can enter a
new dynamic state (through either incremental or more radical change) that allows them “to
access larger or different pools of potential resources” (p. 334), or—in other words—to grow.
What remains quite vague in the dynamic states concept, however, is what exactly happens
within the transition phases between different dynamic states (despite some first theoretical
deliberations on how new orders emerge in dynamic systems; Lichtenstein, 2009, 2016).
Although we know what is changing in a transition phase (the “dominant logic” and the business
model of the firm) and why there are transitions (to sustain the viability of a business in the face
of a changing environment and/or exploit new opportunities to gain access to larger resource
pools; Levie & Lichtenstein, 2010), we do not yet fully understand how transition processes
between different dynamic states actually start and unfold over time.
In this article, we address this issue with the following research question: How are transition
processes between dynamic states initiated and what sequence of activities within transition
processes lead to the emergence of a new dynamic state? For the purpose of exploring how orga-
nizations “leap” from one dynamic state to another, we introduce the term “entrepreneurial leap”
as a synonym for a transition phase between dynamic states in which entrepreneurial action
focused on reconfiguring key elements of the business model allows a firm to tap into new pools
of resources through accessing and exploiting new market potential.
We use a multiple case study method based on 24 small and medium-sized enterprises (SMEs)
from three European countries to investigate what triggers entrepreneurial leaps and analyze
processual patterns within these leaps. Based on the analysis of qualitative empirical data, we
propose a general process model of the transition phase between dynamic states and a theoretical
framework that can help to distinguish different types of entrepreneurial leaps.
By opening the black box of transition processes between dynamic states, our study contrib-
utes to getting down to the entrepreneurial core of dynamic states theory. After all, we can assume
that it is during an entrepreneurial leap rather than within a dynamic state that new opportunities
are “discovered, evaluated and exploited,” as Shane and Venkataraman (2000, p. 218) succinctly
characterized the nature of entrepreneurship. Thus, we do not only extend the dynamic states
model by exploring what is going on in the “missing link” between dynamic states but also learn
more about the emergence and development of entrepreneurial activities in established firms. As
nonlinear growth patterns of the firm can be theoretically explained by alternations of dynamic
states and entrepreneurial leaps, our work on uncovering the initiating factors and processual
patterns of entrepreneurial leaps can also advance our understanding of the phenomenon of
growth as a nonlinear “process of development” (Penrose, 1959, p. 1) that does not necessarily
run through predefined sequential stages.
954 and Mödritscher
Sternad Entrepreneurship Theory and Practice 46(4)
3
In the remainder of this paper, we first review recent work on nonlinear dynamics of firm
growth and discuss how the concept of entrepreneurial leaps can potentially complement exist-
ing theories of nonlinear growth. Thereafter, we distinguish entrepreneurial leaps from other
types of organizational change. We then provide details about our multiple case study research
design and present the results of our analysis of processual patterns of entrepreneurial leaps. In
the discussion and conclusion sections, we relate the findings of our analysis to the literature on
the growth of the firm, highlight our contribution to understanding entrepreneurial growth pro-
cesses in established firms, and sketch out further research opportunities for studying nonlinear
dynamics of firm growth.
Theoretical Background: Nonlinear Dynamics of Firm Growth

Empirical research results suggest that firm growth is not following a predetermined path but can
better be characterized as being uneven, episodic, and nonlinear (Garnsey et al., 2006; Harbermann
& Schuilte, 2017). Several theoretical approaches have tried to overcome the assumptions of the
traditional stage models of growth that implied that firms necessarily follow a predictable
sequence of growth phases. Alternative theories of firm growth that try to explain the develop-
ment of the firm as “the result of an idiosyncratic and unstable process involving the interplay of
the local environment and features internal to the firm” (Vinnell & Hamilton, 1999, p. 5) include
complexity science-based approaches, the concept of trigger points, and the dynamic states the-
ory (Harbermann & Schuilte, 2017; Levie & Lichtenstein, 2010; McKelvey, 2004, 2016).
Complexity Science-Based Theoretical Approaches to Firm Growth

From a complexity science perspective, firms are complex adaptive systems that grow in co-
evolution (through positive feedback processes) with their environment and sometimes go
through “rapid phase transitions caused by adaptive tensions” (McKelvey, 2004, p. 314).
Adaptive tension is a key concept of the complexity sciences approach to entrepreneurship. It is
based on Prigogine’s work on dissipative structures (Prigogine & Stengers, 1984; Prigogine,
1955) that “emerge so as to dissipate the imposed tensions” (McKelvey, 2016, p. 54). In
Prigogine’s (1955) original view, tension was an external force that puts pressure on the system
from outside. In an entrepreneurship context, adaptive tension could build up, for example, when
market demand for a new type of product or service exceeds supply. McKelvey (2016) argues,
however, that there is also self-imposed tension (e.g., when entrepreneurs set new challenging
strategic goals for their firms), as well as tension that is built up by a combination of internal and
external forces (e.g., when a firm develops new competencies in R&D projects that can be used
to meet newly emerging customer demands). In any case, adaptive tension can be seen as a force
that eventually leads to the creation of a “new order” through initiating a phase transition
(McKelvey, 2016, p. 61). In the phase transition, punctuated system-wide shifts that have been
referred to as “emergence events” by Lichtenstein, Dooley et al. (2006) propel a new venture or
an established organization into a new (dynamic) state.
When adaptive tension increases, a system (in our case a firm in a dynamic state) gradually
moves away from equilibrium until it reaches a tipping point where new (dissipative) struc-
tures create a different kind of order (McKelvey, 2004). In the case of entrepreneurial firms,
the threshold (tipping point) that initiates an entrepreneurial leap from one dynamic state into
a new order within an emerging dynamic state is known as a trigger point (Brown & Mawson,
2013). Examples of trigger points are a breakthrough in the development of a new product or
service (internal), a sudden change in the regulatory environment (external), or the signing of
a contract with a customer that challenges the organization to go beyond its existing
Sternad
capacities (co-determined internal and external; Brown & Mawson, 2013). It is at these crit-
ical junctures (Vohora et al., 2004) that the firm has to acquire resources and capabilities that
facilitate the entrepreneurial leap to its next phase of development. Trigger points or critical
junctures mark the start of these transition phases, described by Brown and Mawson (2013)
as “a time of considerable instability and flux for many rapidly growing organizations” (p.
287).
According to the dynamic states theory, transition phases shift a firm from one dynamic state
to another (Levie & Lichtenstein, 2010). A dynamic state is conceptualized as “a network of
beliefs, relationships, systems, and structures that convert opportunity tension into tangible value
for an organization’s customers/clients, generating new resources that maintain that dynamic
state” (Levie & Lichtenstein, 2010, p. 333). Lichtenstein (2009) uses the notion of “opportunity
tension” to describe the “committed intention” of an entrepreneur to set entrepreneurial actions
that enable a firm to capitalize on a business opportunity. Opportunity tension can also be seen as
a dynamic process in which exogenous forces that create adaptive tension (i.e., changes in the
environment) and endogenous forces (i.e., an “internal drive” to enact on a business opportunity)
together act as a catalyst of a “new order” (Lichtenstein, 2009). A “new order” (i.e., a new
dynamic state) occurs when the intention and activities of the people who are leading a business
(the entrepreneurs or managers, respectively), the resource base of the firm, and the resulting
business model match with the market potential, or—in other words—when internal resources
are efficiently and effectively matched with external opportunities (Harbermann & Schuilte,
2017; Levie & Lichtenstein, 2010).
In a typical firm, neither external opportunities nor the internal resource base remain constant.
Therefore, entrepreneurs or managers constantly need to take adaptive actions to ensure that their
firm continues to create value. Firms can adapt either through discontinuous change processes as
proposed by the punctuated equilibrium model or through emergence (Gersick, 1991;
Lichtenstein, 2016; Plowman et al., 2007; Romanelli & Tushman, 1994). According to the punc-
tuated equilibrium model, organizations go through equilibrium periods (periods of relative sta-
bility) that are interrupted by revolutionary periods (in which the organizations fundamentally
change; Romanelli & Tushman, 1994). From a dynamic states perspective, the equilibrium peri-
ods (re-conceptualized as dynamic states) are not static, however, but are rather characterized by
“an inherent tension between stability and change” (Levie & Lichtenstein, 2010, p. 332). These
tensions can induce small changes, which, by means of positive feedback mechanisms, the inter-
action of amplifying actions, and adequate resource support, can also lead to the emergence of a
new dynamic state (Plowman et al., 2007).
Complexity theory, the concept of trigger points, and the dynamic states approach actually
complement each other. They all assume that firms pass through different states in which internal
resources and a firm’s business model match external opportunities, but not necessarily in a pre-
determined order; that the states themselves are dynamic (i.e., characterized by an inherent ten-
sion between stability and change); and that firms progress from one dynamic state to another
either through a process of emergence and continuous self-renewal or through more focused
transition phases. These transition phases, in turn, arise when adaptive tension is built up until a
trigger point is reached—a threshold that catalyzes the transition from a dynamic state to an
entrepreneurial leap.
While the concepts of dynamic states, trigger points, and emergence have received consider-
able attention in the context of firm growth in recent years (Brown & Mawson, 2013; Ingley
et al., 2017; Lichtenstein, 2014; Plowman et al., 2007) and despite empirical evidence for the
occurrence of transition phases between dynamic states (Harbermann & Schuilte, 2017;
Romanelli & Tushman, 1994), there is still a lack of understanding of what exactly happens
within these transition phases, that is, in entrepreneurial leaps.
5
What Is an Entrepreneurial Leap—And What Is Not

Based on Levie and Lichtenstein’s (2010) conceptualization of dynamic states as “the best per-
ceived match between a business model and the market potential” (p. 333), we define an entre-
preneurial leap as a transition phase between dynamic states in which entrepreneurial action
focused on reconfiguring key elements of the business model allows a firm to tap into new pools
of resources through accessing and exploiting new market potential.
As this definition highlights, we are generally talking about a phase in the development of the
firm, that is, a distinct period between a starting point and an endpoint in which a certain sequence
of events leads to transformative change within the firm. Following the dynamic states model,
firms evolve or grow through an alternation of relatively stable phases in which existing market
potential is exploited (dynamic states) and transition phases that are characterized by internal
changes that allow a firm to access and exploit new market potential and pools of resources
(entrepreneurial leaps). The internal changes during an entrepreneurial leap are not incidental but
“created by agency” (Lichtenstein, 2016, p. 45). This means that they are based on intentional
entrepreneurial actions.
By definition, dynamic states are phases in which the existing business model remains well-
aligned with the existing market potential. Within a dynamic state, there are usually no major
changes in the key elements of the business model, and entrepreneurial actions are mainly
focused on exploiting the existing market potential. It is possible that entrepreneurial agents need
to align the business model of their firm to a changing environment, however, not due to their
own drive to open access to new market potential, but because of the demands of the environ-
mental dynamics. The process of aligning key elements of a business model to changes in the
external environment or changing requirements of external stakeholders is known as business
model adaptation (Saebi et al., 2017). The main difference between business model adaptation
and entrepreneurial leaps lies not only in different underlying entrepreneurial intentions but also
in the outcome for the firm. Whereas business model adaptation leads to a better fit between
existing market potential and the (new) business model as market conditions (e.g., customer
needs) change, entrepreneurial leaps actually enable a firm to access completely new market
potential with a reconfigured business model.
A business model as “the design of organizational structures to enact a commercial opportu-
nity” (George & Bock, 2011, p. 99) usually comprises the results of decisions that entrepreneurs
or top managers make regarding the value proposition, value creation processes, and value cap-
ture mechanisms of their firms (Baden-Fuller & Mangematin, 2013; Clauss, 2017). What hap-
pens during entrepreneurial leaps is that entrepreneurial action leads to business model innovation,
which, in turn, enables the firm to access and exploit new market potential. Business model
innovation can be seen as “designed, novel, and nontrivial changes to the key elements of a firm’s
BM [business model] and/or the architecture linking these elements” (Foss & Saebi, 2017, p.
216). “Designed” means that entrepreneurs or top managers set deliberate actions of “firm-
market matching” (Hacklin et al., 2018, p. 95) through changing the business model. Deliberate
actions, in turn, are preceded by entrepreneurial intentions. The key role that entrepreneurial (or
managerial) intentions play in growth processes is also supported by studies that report on signif-
icant correlations between growth aspirations and the actual growth of a firm (Hansen &
Hamilton, 2011; Wiklund & Shepherd, 2003). A theoretical basis for an intention-based model of
entrepreneurial activity is provided by the theory of planned behavior (Ajzen, 1991; Krueger &
Carsrud, 1993). According to this theory, entrepreneurial intention—the conscious plan of an
entrepreneur to set activities in the future—is a crucial predictor of (entrepreneurial) actions
(Krueger et al., 2000; Thompson, 2009), a claim that has also received strong support from
empirical research (Kautonen, van Gelderen, Fink et al., 2015, Kautonen, van Gelderen,
Sternad
Tornikoski et al., 2013). Entrepreneurial leaps are therefore also preceded by a shift of entrepre-
neurial intentions from optimizing the existing business model to reconfiguring key elements of
the business model.
To summarize, we have discussed that based on a prior shift of entrepreneurial intentions,
entrepreneurial actions regarding the business model (or “design characteristics”; Phelps et al.,
2007) of a firm need to change in an entrepreneurial leap in order to enable a transformation
process that eventually leads to a new dynamic balance between the reconfigured business model
and new market potential. As phases in the development of a firm, entrepreneurial leaps are ini-
tiated when adaptive tension increases until a threshold is reached, a “trigger point” that marks a
significant shift of entrepreneurial intentions and subsequent entrepreneurial actions toward
business model innovation, eventually allowing a firm to access and exploit new market poten-
tial. Following our discussion above, we will try to focus on both, the increase of adaptive ten-
sion that leads to a shift in entrepreneurial intentions (or “evolution of intent”; McMullen &
Dimov, 2013, p. 1504) (as an antecedent of entrepreneurial leaps) and the sequence of actions
that are focused on changing in the key elements of the business model, when we analyze 24
cases of firms that progressed through entrepreneurial leaps.
Method
Our main research aim is to explore how entrepreneurial leaps emerge and unfold from a proces-
sual perspective. As only limited theory on the functioning of these processes is available, we use
an inductive multiple case study method that is appropriate for studying processes in situations
where theory still needs to be elaborated (Creswell & Poth, 2017; Yin, 2009). Using multiple
cases can also help to reveal variance in processes with equifinality in outcomes and develop
more robust theory compared to single cases (Eisenhardt & Graebner, 2007; Eisenhardt et al.,
2016).
Sample and Data Collection

We used a theoretical sampling approach to select companies that had gone through significant
transitions that allowed them to access new market potential. We then applied structured data
analysis methods to identify triggers and processual patterns of entrepreneurial leaps across the
cases.
With the aim of getting a differentiated base of growth and development patterns, we included
24 cases from three different countries (Austria, Germany, and Italy) and from three very differ-
ent industries, one mainly service-oriented industry (hotels), one highly production-focused
industry (timber processing), and one IT-based high-tech industry (intelligent information and
production technology, IIPT). We focused on more dynamic industries (compared to the average
growth dynamics of the respective economic sectors), as we expected that firms in industries
with higher growth rates had to undergo major transitions in order to adapt to changing market
conditions. The firms in our sample were supposed to (a) have reached a high level in both prod-
uct and service quality and business success in their industry and (b) have a reputation in their
industry for having made significant improvements in both of these categories over the previous
few years. We based these selection criteria on the assumption that firms that had evolved from
a lower level to quality leadership in their industry were also able to access new market potential
(in the premium segment of the respective market), and that firms that had increased their busi-
ness performance were also able to capture value from exploiting the new market potential.
In addition to using secondary sources (e.g., company websites, news reports, or information
from institutions that confer awards and certifications), we asked 15 industry experts to support
7
us in our search for firms that had successfully progressed through entrepreneurial leaps. For
assessing the level of product and service quality, we used a combination of quality awards/cer-
tifications and the evaluation of the industry experts. As comparable financial data were not
publicly available for SMEs in the target region, we had to rely on qualitative information from
secondary sources and the evaluation of the industry experts to assess the relative business per-
formance of the individual enterprises. The findings from the desk research and the expert survey
were first compiled in evaluation sheets (company selection forms) that were prepared for 78
firms that we had found in our focused search. We then summarized the data that we had col-
lected on the companies in a “master list” for each industry, which formed the basis for selecting
the cases. We tried to identify the companies that best fit our selection criteria, contacted the CEO
of these companies, and finally included seven cases from the hotel industry, eight cases from the
timber processing industry, and nine cases from the high-tech industry (IIPT) in our sample. A
detailed overview of the sample is provided in Table 1. We use generic firm names to ensure the
anonymity of our informants.
Based on a review of the literature, we developed an eight-page interview guideline that we
used as a basis for our interviews with key informants in the selected companies. The interview
guideline included questions about the main development steps that had enabled the firms to
reach their exceptional market position in both quality and business success. Between May 2017
and February 2018, we collected interview material of approximately 63 hours. In all cases, we
interviewed the CEO (or managing director) and two other key informants who were directly
involved or responsible (e.g., as a project leader) in the major development steps of the firm. As
our sample was restricted to founder-led or family-owned firms, the CEOs usually had long ten-
ures, which allowed us to get more authentic reports about growth-related developments in the
firm over a longer period of time. We also specifically asked for informants who had been in key
positions in the firm for a very long time, so that we could obtain first-hand information on the
development of the firms during the previous few years or even decades. Altogether, 72 semi-
structured interviews were conducted. The interviews focused on generating in-depth narrative
data on the main transition phases of the firm (i.e., the potential entrepreneurial leaps) and on
identifying preconditions, triggers, activities, challenges, external support, and outcomes of
these transition phases. All interviews were recorded and transcribed. In our case database, we
complemented the 1,211 pages of interview transcripts with 4,445 pages of additional archival
material including internal company documents that we obtained from our interview partners,
brochures, annual reports, website data, and published materials.
To ensure data validity, we used nondirective questioning techniques as proposed by Huber
and Power (1985), assured informant anonymity, and used a step-by-step tracking of events
during the entrepreneurial leap phase in the interviews with the informants (Hannah & Eisenhardt,
2018). Further validity-enhancing measures were the use of multiple key informants who were
strongly involved in the entrepreneurial leaps and a triangulation of their statements with archi-
val sources of evidence (Hannah & Eisenhardt, 2018; Yin, 2009). In the course of the interviews
with the first key informant in each firm, we developed a first time axis for the potential entrepre-
neurial leaps. In the following interviews with the two other informants in the same firm, we tried
to validate these timelines as well as the content of the leaps. We also compared the findings from
the interviews with an analysis of secondary data about the firm in order to be able to validly
describe the leaps in terms of timing and content.
8
Table 1. Overview of Cases (Source: Authors).

Sternad
Annual turnover Total duration of Number of pages

Number of in million EUR interviews of additional
Firm Year founded employees (2017) (2016) Location Industry Focus (hrs:min) material
T1 1854 78 50 Austria Timber processing Timber processing 01:57:35 157
T2 1877 70 20 Italy Timber processing
Timber-based interior 02:35:21 68
decoration
and Mödritscher
T3 1896 350 70 Germany Timber processing Timber construction 01:56:52 646

T4 1924 42 13.5 Germany Timber processing Timber construction 02:43:05 260
T5 1930 35 12 Austria Timber processing Timber construction 02:27:54 137
T6 1953 30 3 Austria Timber processing Timber-based interior 02:50:01 30
decoration
T7 1960 45 7.6 Austria Timber processing Timber-based interior 03:24:04 104
decoration
T8 1963 100 16 Austria Timber processing Timber construction 03:01:22 60
H1 1918 170 16 Austria Hotel 5-star resort & spa 03:28:36 522
H2 1929 118 12 Austria Hotel 4-star superior hotel 03:18:10 229
H3 1950 80 7 Germany Hotel 4-star lodge & spa 03:09:24 176
H4 1955 60 3.5 Austria Hotel 4-star superior hotel 04:04:10 369
H5 1961 Around 30 2.1 Austria Hotel 4-star superior hotel 03:27:20 146
H6 1976 180 Over 20 Austria Hotel 5-star resort 02:43:13 519
H7 1990 130 13.5 Austria Hotel 4-star superior hotel 02:33:42 421
I1 1949 17 Approx. 7 Austria IIPT Road safety systems 01:35:62 148
I2 1980 125–130 Approx. 30 Italy IIPT Opto-electronic solutions 01:35:17 54
(2017 estimate) for wood processing
I3 1989 350 24 Germany IIPT Software engineering and 01:47:53 94

consulting
I4 1996 16 1.4 Austria IIPT Software solutions 01:24:36 42
959
(Continued)
Sternad
Table 1. Continued
Annual turnover Total duration of Number of pages
Number of in million EUR interviews of additional
Firm Year founded employees (2017) (2016) Location Industry Focus (hrs:min) material
I5 1998 30 3.5 Austria IIPT Medical diagnosis tools 01:43:11 57
I6 1999 Around 30 2 Austria IIPT RFID testing solutions 01:45:19 41
I7 2000 300 Approx. 30 Austria IIPT Digital business solutions 01:34:37 49
(2017 estimate)
I8 2003 20 3.5 Austria IIPT Cosmetics testing 01:46:50 58
technology
I9 2005 Around 50 4.6 (2017 Austria IIPT Software solutions 02:02:52 58

estimate)
Abbreviation: IIPT = Intelligent information and production technology.

9
Sternad
Data Analysis and Theory Building

Our data analysis included analytical techniques focused on (1) understanding the content and
processes of entrepreneurial leaps in each individual case and (2) recognizing patterns across
cases and finding theoretical interpretations of these patterns (Yin, 2009).
We began our data analysis with an open coding procedure using the MAXQDA qualitative
data analysis software. We used the main development steps and transition phases that the inter-
viewees reported on as a starting point. Within the individual transition phases, we used an open
coding procedure to identify first-order codes that represent the key activities, preconditions,
challenges, support systems, and outcomes of each transition phase. In a second step, based on a
combination of interview and archival data, we created thick descriptions in the form of case
vignettes to summarize the case history for each firm in a structured way. The vignettes helped
us to get a more focused overview of the sequence and content of potential entrepreneurial leaps.
Both the coding and the writeup of vignette drafts were conducted by one researcher and then
reviewed by a second researcher with reference to the original material in order to reduce subjec-
tivity. In the joint data interpretation process that always involved two researchers, some transi-
tion phases from the initial coding procedure were adjusted either by means of integrating two or
more phases into one potential entrepreneurial leap (when the development steps were closely
related) or separating development steps that the interviewees reported on into more than one
entrepreneurial leap (when the steps were clearly distinct in content and far apart in time). The
codes and case vignettes were adjusted accordingly. The first-order codes were then aggregated
into higher-order concepts to achieve a clearer understanding of the main phenomena on a more
abstract level (Eisenhardt et al., 2016).
Following this procedure, we identified 92 potential leaps in the 24 cases. For each case, we
then used network displays to visualize the event history of each potential entrepreneurial leap
(Miles et al., 2014) (see Figure 1 for one example out of the 92). In the next step, we clustered
and aggregated the activities within each potential leap along the higher-order categories that we
Figure 1. An example of a network display to visualize the main steps in one entrepreneurial leap
(Source: Authors).
Table 2. Structured Analysis of Entrepreneurial Leaps (Source: Authors).
Sternad
Value creation innovation Value capture

Value proposition innovation innovation
Access to/exploitation
Trigger (O–opportunity, Opportunity New customers and New customer of new market
Leap Leap title Timeframe D–distress) commitment New capabilities New technology New partnerships New processes New offerings markets New channels relationships New revenue models potential Process pattern Condensed pattern
T1-A Focus on premium 1990–95 Concrete new Commitment to Development Higher quality timber Focus on the Positioning as Access to premium 1.New technology; 2. Type A: Value
niche market customer demand focusing on of new products premium premium market New offerings; 3. creation
(O) premium niche technological market segment vendor New customers innovation
market solutions; new and markets; 4. - value
production New customer proposition
machines relationships; innovation -
5. New market new market
potential potential
T2-A First museum 1991–92 Request from a Commitment to Building know-how Modernization of Process Interior design for Reference project Access to the 1.New customers and Type B: Value
project museum customer working on a (museums production optimization museums in the museums interior design markets; 2. New proposition
(O) reference project business) market market for offerings 3. New innovation -
museums capabilities; 4. value creation
New technology; innovation
5. New processes; - new market
6. New market potential
potential
T2-B Internationalization 1992–93 Successfully completed Commitment to Building know-how Building a network New sales and New markets Sales through Access to 1.New customers and Type B: Value
museum project internationalizing (market studies, with architects logistics abroad networks with international markets; 2. New proposition
as a reference the business logistics, processes; architects markets capabilities; 3. innovation -
for international training) stronger focus New processes; 4. value creation
customers (O) on quality New partnerships; innovation
5. New channels; - new market
potential
T2-C First flagship store 2005–06 Acquisition of Commitment to Employee training Quality Interior design for Reference project Access to the 1.New customers Type B: Value
for a luxury a reference implementing a management luxury retailers in the luxury interior design and markets; 2. proposition
brand customer in the new reference and certification retail market market for luxury New offerings; 3. innovation -
luxury segment project retailers New capabilities; value creation
(O) 4. New processes; innovation
5. New market - new market
potential potential
T3-A Focus on healthy 1988–95 Stroke of fate in the Commitment to Building R&D Developing a new New network Innovation culture Specialization on Focus on health- Access to the 1.New capabilities; 2. Type A: Value
buildings family (severe specializing in capabilities insulation partners healthy buildings conscious market for New technology; creation
illness of a a niche solution customers health-conscious 3. New processes; innovation
member of the customers 4. New - value
entrepreneurial partnerships; 5. proposition
family; D) New offerings; 6. innovation -
New customers new market
and markets; potential
7. New market
potential
T4-A Specialization in 2005–06 Reaching technical Commitment to Patents in hybrid New hybrid New construction Functional hybrid Focus on the public Public tenders Public sector as 1.New capabilities; 2. Type A: Value
hybrid building constraints specialization on construction construction processes buildings for the sector a new core New technology; creation
construction in timber public tenders / technology public sector market 3. New processes; innovation
systems construction (D) hybrid buildings / new IT 4. New offerings; - value
technology 5. New customers proposition
and markets; 6. innovation -
New channels; new market
potential
T5-A Specialization as 1997–2000 Work accident of an Commitment to New employees External expert for Change of location Passive houses Sustainability- Access to passive 1.New capabilities; 2. Type A: Value
a vendor of employee —need specializing on with passive passive houses and production oriented house market New partnerships; creation
passive houses to rethink the passive house house know- processes customers 3. New processes; innovation
company setup (D) construction how 4. New offerings; - value
5. New customers proposition
and markets; innovation -
potential potential
(Continued)
11
12
Table 2. Continued
Sternad

T5-B Change to 2007–09 Reaching limits for Commitment to Further Industrial New industrial Access to broader 1.New capabilities; 2. Type C: Value
industrial further strategic changing the development of manufacturing manufacturing market potential New technology; creation
production development production passive house technology processes (due to lower 3. New processes; innovation -
with the current processes technology (lower costs) 4. New market new market
operational / industrial production potential potential
setup (D) manufacturing costs)
and planning
competence
and Mödritscher
T6-A Focus on premium 2000–05 Inability to serve Commitment People New machines Optimization of Higher quality Access to premium 1.New capabilities; 2. Type A: Value
furniture market demand to quality development production offerings market New technology; creation
with the current development processes; 3. New processes; innovation
quality level (D) quality 4. New offerings; - value
management; 5. New market proposition
certification potential innovation -
new market
potential
T7-A Focus on luxury 2000–03 Financial problems— Commitment to Project Use of external Specialization on Focus on premium New showroom Access to the 1.New capabilities; 2. Type A: Value
interior design close to specializing in management consultant premium products segment premium interior New partnerships; creation
bankruptcy due interior design capabilities / design market 3. New channels; innovation
to the loss of key interior design 4. New offerings; - value
customers (D) know-how 5. New customers proposition
and markets; innovation -
potential potential
T8-A Specialization 1992–95 Stroke of fate in the Commitment to Building timber- Development of Cooperation with New production Larger construction Public sector Access to public 1.New partnerships; Type A: Value
in timber entrepreneurial focusing on timber processing special timber- mechanical processes projects customers sector customers 2. New creation
construction family (death of construction know-how processing engineering / lower (e.g., sports capabilities; 3. innovation
the founder; D) machines experts production arena); general New technology; - value
costs through contractor 4. New processes; proposition
efficiency 5. New offerings; innovation -
improvements 6. New customers new market
and markets; potential
7. New market
potential
T8-B Building a design 2007 Unplanned contact Commitment to Planning & Partnership with More flexible Large-scale Opening Relationship- Access to 1.New customer Type B: Value
center for with the CEO of a bidding for a prefabrication local architect processes; architectural international building with international relationship; 2. proposition
a leading major automotive design center capabilities prefabrication projects markets and international corporate New offerings; innovation -
automotive company (O) abroad processes the market customers market 3. New value creation
brand for corporate customers and innovation
customers markets; 4. New - new market
partnerships; 5. potential
New capabilities;
6. New processes;
7. New market
potential
H1-A Conversion into 2002–04 Capacity utilization Commitment to New management; Renovated rooms; Premium customer Access to premium 1.New capabilities; 2. Type A: Value
5-star hotel problems with investment in new hotel new wellness segment market New offerings; 3. creation
the existing infrastructure infrastructure infrastructure; (positioning as New customers innovation
positioning (D) new experience 5-star hotel) and markets; - value
offerings 4. New market proposition
potential innovation -
new market
potential
H1-B Specialization as 2007–13 Benchmarking Commitment to clear New employee Optimization Extension of wellness Positioning as Positioning as a Exploitation of rest- 1.New capabilities; 2. Type A: Value
a hotel for revealed a need positioning experience of service infrastructure adults-only brand seeking customer New processes; creation
adults for clearer (premium processes hotel; market 3. New offerings; innovation
positioning (D) employee abandonment 4. New customer - value
resort) of families as a relationships; 5. proposition
customer group New customers innovation -
and markets; new market
potential
(Continued)
963
Table 2. Continued
Sternad
H2-A Extension 1995–2005 Competitive Commitment to Additional wellness Innovative hotel Wellness-seeking Access to a new 1.New capabilities; 2. Type A: Value
(wellness) disadvantage investment in competence; experience customers segment of New offerings; 3. creation
noticed in infrastructure new hotel (e.g., warmed experience- New customer innovation
comparison with infrastructure lake; hammam); seeking wellness segments and - value
other industry new experience customers markets; 4. New proposition
players (D) offerings market potential innovation -
new market
potential
H3-A Construction of 2002–04 Perceived need to Commitment to Employees with New wellness More focused Access to new 1.New capabilities; 2. Type A: Value
wellness area follow the wellness investment in spa and health offerings on wellness- customer New offerings; 3. creation
trend and focus infrastructure know-how; seeking segment New customers innovation
on particular new hotel customers (wellness-seeking and markets; - value
customer infrastructure customers) 4. New market proposition
segments (D) potential innovation -
new market
potential
H4-A Extension of 2002 Customer demand Commitment to Qualified Extension of wellness New customer Access to new 1.New capabilities; 2. Type A: Value
wellness area and goal to investment in employees infrastructure; segments customer New offerings; 3. creation
increase capacity infrastructure (sports/ watersports (sports-affine; segment (sports/ New customer innovation
utilization (O) wellness); infrastructure wellness- wellness) segments and - value
new hotel & experience seeking) markets; 4. New proposition
infrastructure offerings market potential innovation -
new market
potential
H5-A Construction of 1998 Decline of mass Commitment to Capabilities New marina; new Yacht owners as a New revenue Access to new 1.New capabillities; Type D: Value
marina tourism in the investment in in marina access to the new customer streams from customer 2. New offerings; creation
region and infrastructure construction lake; extension of segment renting marina segment (yacht 3. New customer innovation
perceived need and experience offer space owners) segments and - value
to improve the management markets; 4. New proposition
experience quality revenue models; innovation -
for customers (D) 5. New market value capture
potential innovation
- new market
potential
H5-B Extension of 2004–05 Perceived need Commitment to Specially qualified Extension of wellness Targeting Access to new 1.New capabilities; 2. Type A: Value
wellness area to react to investment in employees (spa infrastructure low-season customer New offerings; 3. creation
competitive infrastructure and wellness); customers segment New customer innovation
disadvantage (D) new hotel (wellness) segments and - value
infrastructure markets; 4. New proposition
market potential innovation -
new market
potential
H5-C Specialization 2006–07 Opportunity to Commitment to clear Specialized qualified Cooperation with New culinary New customer Access to new 1.New capabilities; 2. Type A: Value
as a culinary cooperate with positioning employees romantic hotels offerings groups (cuisine- customer New partnerships; creation
romantic hotel an alliance of (chef) association affine) segment (cuisine- 3. New offerings; innovation
romantic hotels affine) 4. New customer - value
(O) segments and proposition
markets; 5. New innovation -
market potential new market
potential
H6-A Extension of 1991 Customer demand Commitment to Additional wellness Cooperation with New wellness New customer Access to new 1.New offerings; 2. Type B: Value
wellness area for wellness investment in competence wellness hotels infrastructure; groups customer New capabilities; proposition
offers (O) infrastructure association extension of (wellness) segment 3. New innovation -
experience (wellness) partnerships; 4. value creation
offerings New customers innovation
and markets; - new market
potential
H6-B Positioning as a 1995–2000 Customer demand Commitment to Additional sports New wellness Focus on family and Clear positioning as Exploitation of new 1.New capabilities: 2. Type A: Value
family and for more sports focusing on and wellness offerings for sports-affine family and sports market potential New offerings; 3. creation
sports hotel and wellness two customer competence children; new target groups hotel (family/sports) New customers innovation
offerings (O) segments sports offerings and markets; 4. - value
New customer proposition
relationships; innovation -
potential potential
13
(Continued)
14
Table 2. Continued
Sternad

H6-C Repositioning as a 2010–16 Infrastructure Commitment to New employee New hotel Targeting premium Positioning as a Access to premium 1.New capabilities; 2. Type A: Value
5-star hotel renovation investment in experience infrastructure segment 5-star hotel market New offerings; 3. creation
necessity (D) infrastructure (premium (fitness, rooms, customers New customer innovation
employee restaurant); relationships; 4. - value
resort) extension of New customers proposition
experience and markets; innovation -
and Mödritscher
offerings 5. New market new market

potential potential
H7-A New ownership 2006 Benchmarking Commitment to Additional wellness New wellness Wellness-seeking Access to wellness- 1.New capabilities; 2. Type A: Value
revealed investing into competence; infrastructure; customers seeking customer New offerings; 3. creation
competitive the hotel and new hotel new rooms; segment New customer innovation
disadvantage experience infrastructure new experience segments and - value
in the wellness infrastructure offerings markets; 4. New proposition
segment (D) market potential innovation -
new market
potential
I1-A Product innovation 1990–2000 Customer demand Commitment to Product New technology New partners for Establishing New products New customers New revenue Access to completely 1.New technology; 2. Type D: Value
(in the traffic in a new market developing development in in the field of technology marketing and streams from new market New capabilities; creation
safety segment) segment (O) products in a new a new market traffic safety development sales processes new products segment (traffic 3. New innovation
market in new markets safety) partnerships; 4. - value
New processes; proposition
5. New offerings; innovation -
6. New customer value capture
relationships; 7. innovation
New revenue - new market
model; 8. New potential
market potential
I1-B Internationalization 2002 Orders from Commitment to International sales New international International New international International Access to new 1.New capabilities; 2. Type A: Value
international internationalizing competences sales partners marketing and customers customer customer groups New partnerships; creation
customers (O) the business and networks sales processes relationships (e.g., in Asia) 3. New processes; innovation
4. New customers - value
and markets; 5. proposition
New customer innovation -
relationships; new market
potential
I2-A New multisensor 1995 Technological Commitment to New technology New technological Access to new 1.New technology; Type A: Value
technology breakthrough (O) technology solutions; new customer 2. New offerings; creation
development products groups 3. New market innovation
potential - value
proposition
innovation -
new market
potential
I2-B Internationalization 1996 Demand from Commitment to International sales International sales International Access to new 1.New partnerships; 2. Type A: Value
international internationalize competences partners customers international New capabilities; creation
customers (O) the business customers 3. New customers; innovation
4. New market - value
potential proposition
innovation -
new market
potential
I2-C Technology 2012 Technological Commitment New technology Partners for Significant Access to new 1.New partnerships, 2. Type A: Value
improvement breakthrough (O) to improve technology improvement market potential New technology, creation
technology development of quality and 3. New offerings; innovation
customer value 3. New market - value
innovation -
new market
potential
(Continued)
965
Table 2. Continued
Sternad

I3-A Focus on the core 2010 Unclear strategic Commitment to Ability to develop Project Projects and solutions New revenue Access to new 1.New capabilities; 2. Type D: Value
business positioning focusing on the the business management for customers streams as customer New processes; creation
(incompatibility of core business a solution groups 3. New offerings; innovation
existing business provider 4. New revenue - value
models; D) models; 5. New proposition
value capture
innovation
- new market
potential
I3-B Improvement of 2011–13 Customer demand Commitment to Establishing a Higher quality Access to new 1.New capabilities; Type A: Value
internal quality for higher quality qualitative growth mindset toward solutions market potential 2. New offerings; creation
solutions (O) quality 3. New market innovation
potential - value
proposition
innovation -
new market
potential
I3-C Campus academy 2017 Insufficient knowledge Commitment to Teaching & training; New competence Education and New education Access to new 1.New capabilities; 2. Type D: Value
management establishing an knowledge models training also for and training customer groups New processes; creation
within the interactive learning sharing customers revenue model (e.g., in Asia) 3. New offerings; innovation
firm (D) system 4. New revenue - value
models; 5. New proposition
value capture
innovation
- new market
potential
I4-A From speed to 1999 Customer Commitment to Software New software New revenue Access to new 1.New capabilities; Type D: Value
quality dissatisfaction with increasing development streams from markets 2. New offerings; creation
current offers (D) software quality software sales 3. New revenue innovation
models; 4. New - value
market potential proposition
innovation -
value capture
innovation
- new market
potential
I4-B Sales partnership 2013 Inability to reach Commitment to New sales partners New markets New sales channels New revenue Access to new 1.New partnerships; Type D: Value
strategic goals outsourcing sales (because of opened through streams (from markets 2. New channels; creation
with the current to partners new sales partner firms sales partners) 3. New customers innovation
sales setup (D) partners) and markets; 4. - value
New revenue proposition
models; 5. New innovation -
market potential value capture
innovation
- new market
potential
I5-A Cooperation 1 2004–09 Inability to address Commitment to Cooperation with International International Access to 1.New partnerships; Type A: Value
international cooperate international customers distribution international 2. New channels; creation
market potential in product partners partners markets 3. New customers innovation
(D) development and markets; - value
and sales 4. New market proposition
New market
potential
I5-B Cooperation 2 2007+ Cooperation Commitment to New partnerships Outsourcing International Access to 1.New partnerships; Type A: Value
opportunity outsourcing distribution international 2. New processes; creation
(outsourcing production partners markets 3. New channels; innovation
partner; O) 4. New market - value
innovation -
new market
potential
(Continued)
15
16
Sternad
Table 2. Continued
I5-C Business alliance 2016+ Concrete customer Commitment to New technology Partners for Outsourcing New technology and International Access to 1.New partnerships; 2. Type A: Value
demand from cooperation research & products distribution international New technology; creation
international development partners markets 3. New offerings; innovation
markets (O) 4. New channels; - value
5. New market proposition
and Mödritscher
new market
potential
I6-A From service to 2005–06 Customer Commitment to Product New technology Product offerings Change of revenue Access to new 1.New technology; 2. Type D: Value
product requirements focusing on development (instead of IT model from international New capabilities; creation
that demanded products (rather services) from selling markets 3. New offerings; innovation
innovation (O) than services) services 4. New revenue - value
to offering models; 5. New proposition
products market potential innovation -
value capture
innovation
- new market
potential
I6-B Going serial 2008–10 Concrete customer Commitment to Series production Reduced costs Access to new 1.New capabilities; 2. Type C: Value
demands (O) increasing capacity know-how through series international New processes; creation
production markets with 3. New market innovation -
new customer potential new market
groups potential
I6-C Focus on 2010+ Enhanced quality Commitment to New production Serial products with New revenue Further exploitation 1.New capabilities; Type D: Value
higher-priced requirements of developing and technologies higher quality and streams from of international 2. New offerings; creation
products customers (O) offering high- higher prices serial products markets with 3. New revenue innovation
quality product with higher new customer models; 4. New - value
series quality and groups market potential proposition
higher prices innovation -
value capture
innovation
- new market
potential
I7-A Going e-commerce 2012 Identification of Commitment to Develop a E-commerce Clients as strategic New solution New revenue Access to new 1.New partnerships; Type D: Value
market potential developing an solution for technology partners for offerings streams as customer groups 2. New creation
for e-commerce e-commerce e-commerce the solution; a solution as a solution capabilities; 3. innovation
solution (O) solution (based on software provider provider New technology; - value
specific partner 4. New offerings; proposition
software) 5. New revenue innovation -
models; 6. New value capture
market potential innovation
- new market
potential
I7-B The "big solution" 2013 Acquisition of a Commitment to Large software Clients of larger Ongoing customer Access to new 1.New partnerships; Type A: Value
partner firm by growth and to company size relationships as a customers 2. New customers creation
a large software follow the partner as a new solution provider through the and markets; 3. innovation
company opened into the acquisition partner (as a partner network New customer - value
new cooperation consequence of relationships; proposition
opportunity (O) the acquisition 4. New market innovation -
of the software potential new market
partner) potential
I7-C Internationalization 2017 Demand from Commitment to International sales International sales International Ongoing Access to new 1.New capabilities; 2. Type A: Value
international internationalizing process markets international international New processes; 3. creation
markets (O) the business customer customers New customers innovation
relationships and markets; 4. - value
as a solutions New customer proposition
provider relationships; innovation -
potential potential
(Continued)
967
Sternad
Table 2. Continued
I8-A Internationalization 2013 Demand from Commitment to Know-how about International New internal Specialized International health Sales partners Change of revenue Scaleable business 1.New capabilities; 2. Type D: Value
international internationalizing international partners processes products for the companies as model from model through New partnerships; creation
markets (O) the business business; international new customers selling printing selling products 3. New processes; innovation
leadership health industry services to 4. New offerings; - value
capabilities becoming 5. New channels; proposition
a solutions 6. New customers innovation -
provider and markets; 7. value capture
New revenue innovation
models; 8. New - new market
market potential potential
I9-A Clarifying the 2008+ Perceived need to Commitment to Product Technology Innovative product on Discovered a Long-lasting New revenue Access to new 1.New technology; 2. Type D: Value
position in the focus strategically focusing on development development the market market niche customer streams from market niche New capabilities; creation
market (focus) due to a highly products and relationships innovative 3. New offerings; innovation
competitive technology solutions 4. New customers - value
environment (D) and markets; 5. proposition
New customer innovation -
relationships; 6. value capture
New revenue innovation
models; 7. New - new market
market potential potential
I9-B Improving sales 2016 Financial problems Commitment to Sales processes New international New international Access to new 1.New processes; 2. Type A: Value
due to a lack of improving and customers customer international New customers creation
sales (D) broadening sales relationships customers and markets; 3. innovation
competence and New customer - value
activities relationships; proposition
4. New market innovation -
potential new market
potential
17
Sternad
identified from the aggregate analysis of first-order codes. As tentative theoretical constructs
emerged from the data, we went through several rounds of cycling between the emergent themes,
case data, and the literature to define core constructs and explain possible relationships between
them (Eisenhardt, 1989; Hannah & Eisenhardt, 2018).
After the within-case analysis, we also conducted a cross-case analysis following replication
logic (Eisenhardt, Graebner, Sonenshein et al., 2016; Eisenhardt, 1989; Yin, 2009). We used
matrices, tables, and charts to identify main themes, recurring topics, and cross-case patterns
(Miles et al., 2014). The process went through several iterations with the aim of linking the new
insights with existing concepts of dynamic states theory. One of the main instruments that we
used in our analysis is Table 2. Based on the findings from the case vignettes and network dis-
plays, we compiled information on the entrepreneurial actions that were focused on changing
different elements of the business model for each potential leap. Based on a review of the more
recent business model literature between 2002 and 2014, Clauss (2017) developed a comprehen-
sive scale for business model innovation based on three main dimensions: (a) value creation—
which actions do entrepreneurs set in order to change the way in which the firm creates value
along the value chain with the help of new capabilities, new technologies/equipment, new pro-
cesses and structures, and new partnerships; (b) value proposition—which actions do entrepre-
neurs take to change the “portfolio of solutions” that the firm offers to various customer groups
(new offerings, focusing the firm on new customers and markets, new channels, and new cus-
tomer relationships); and (c) value capture—which actions do entrepreneurs set to change the
mechanisms by which value propositions are turned into revenues (change of revenue models or
“modes” of revenue generation (Zott & Amit, 2010)—for example, from selling goods to provid-
ing goods as a service). We do not include “new cost structure,” one of the subdimensions of
value capture in the original Clauss (2017) business innovation model, as we noticed during the
analysis of our data that almost all changes in cost structure were actually attributable to either
new capabilities, new technologies, new processes, or new partnerships.
We then analyzed each potential leap with the following two criteria that we based on our
definition of an entrepreneurial leap: (1) Were key elements of the business model changed? and
(2) Did the leap enable the firm to access and exploit new market potential? Forty-six out of the
92 potential leaps fulfilled both criteria and were thus classified as actual entrepreneurial leaps
(Table 2). Based on the network displays and case vignettes, and supported by further consulta-
tion of the original data, we also identified process patterns in which the changes of the individ-
ual elements of the business model unfolded for each leap (see the “Process pattern” column in
Table 2). We then condensed the emerging patterns using the higher-order concepts of value
creation innovation, value proposition innovation, and value capture innovation (Clauss, 2017)
(“Condensed pattern” in Table 2) and derived four general process patterns of entrepreneurial
leaps that we report on in the following Results section.
Results
Following the analysis procedure that we outlined in the Method section, we identified 46 entre-
preneurial leaps in the 24 cases. For each leap, we examined both the initiating factors and the
business model changes during the transition phase. We also investigated the transition phase
from a process perspective, thus trying to shed light on how entrepreneurial leaps unfold over
time. In the following, we report on the main results of our analysis.
19
Adaptive Tension and Trigger Points

In the cases that we investigated, we found support for the idea that internal and external forces
contribute to the buildup of adaptive tension that is subsequently released at trigger points which
function as catalysts for the growth leaps (Brown & Mawson, 2013; McKelvey, 2016).
Interviewees in all companies could name distinct developments or events that marked the start
of an entrepreneurial leap. Although individual triggers differed widely, they can be clustered
into two basic categories: opportunity triggers and distress triggers.
Opportunity triggers include technological breakthroughs (I2-A, I2-C), cooperation opportu-
nities (H5-C, I5-B, I7-B), and concrete customer demand (T1-A, T2-A, T2-B, T2-C, T8-B, H4-
A, H6-A, H6-B, I1-A, I1-B, I2-B, I3-B, I5-C, I6-A, I6-B, I6-C, I7-A, I7-C, I8-A). One example
for a technological breakthrough as a trigger could be found in leap I2-C, in which a firm that was
specialized in providing opto-electronic solutions for identifying the optimal cutting position for
timber logs was the first to transfer solutions from medical technology to timber processing tech-
nology. Through the integration of roentgen and magnetic resonance technologies in its timber
scanning solutions, the firm achieved a technological breakthrough that allowed it to offer a
considerably higher measurement quality, which in turn led to a new value proposition that
paved the way for exploiting new market potential. An example for a cooperation opportunity as
a trigger for an entrepreneurial leap is the acquisition of a partner company by an industry leader
[I7-B], which allowed a software firm to offer completely new services to the market (which
were directly linked to the industry leader’s software offers).
Concrete customer demand for products and services outside of the current scope of a com-
pany as well as demand from new customer segments can also mark the beginning of an entre-
preneurial leap. Examples include a joinery that entered the museums and jewelry store market
with a customer in a completely new customer segment (a new flagship museum in Northern
Italy—“That was the point when we entered the museum business—and since then, we have
furnished a few hundred museums” [interviewee about leap T2-A]), or an Austrian timber con-
struction company that accessed the international market for corporate buildings through com-
pleting a reference project for a well-known automotive brand in the UK [T8-B].
In contrast to opportunity triggers (favorable situations that allow the firm to enter into a new
development stage), distress triggers are “painful” situations that force a firm to change. In our
case data, we could identify instances of financial distress (T7-A, I9-B), organizational distress
(T3-A, T4-A, T5-A, T8-A, I3-C), and strategic distress (T5-B, T6-A, H1-A, H1-B, H2-A, H3-A,
H5-A, H5-B, H6-C, H7-A, I3-A, I4-A, I4-B, I5-A, I9-A).
One example for financial distress is the insolvency and subsequent loss of a key customer in
an Austrian joinery firm (“Around 40 percent of our turnover was covered by that customer […]
but then, all of a sudden, this customer went bankrupt” [T7-A]), which demanded a fast and
fundamental reorientation of the business model. Organizational distress occurs when an organi-
zation comes to a point at which it is no longer possible to grow and develop further with the
existing organizational setup. One example is a timber construction company that reached tech-
nical limitations. “We are constructing preschool and school buildings and they have very long
static span widths of eight meters in their ceiling systems, and you cannot reasonably build this
with timber any more,” said a top manager of the firm about leap T4-A. “And that’s when we
started to include other products.” Recognizing these limitations was the trigger for offering new
hybrid buildings based on a combination of timber, concrete, and steel, which helped the firm to
access completely new markets for functional public buildings. Other examples of organiza-
tional distress include the sudden death of a company’s founder, which forced his two sons and
successors to “make the biggest decision in the company’s history” (T8-A), redirect entrepre-
neurial intentions and change the business model, or a work accident and the subsequent legal
Sternad
proceedings, which resulted in a reorganization of the company and a redirection of the strategic
focus (T5-A).
The most prevalent type of distress in our sample is strategic distress, a situation in which the
current business model no longer allows the firm to make strategic moves that are necessary to
remain competitive. Examples include competitive disadvantages that were identified in a bench-
marking process (e.g., in leaps H1-B, H2-A, H7-A). One interviewee, for example, said: “We
noticed that more and more hotels specialized in families and children—but you need to decide
whether to invest in infrastructure” [H1-B]. Due to the competitive pressure, the entrepreneur
decided against building new infrastructure for families, and instead positioned the hotel in a
more uncontested market space as an “adults only” resort. In another example, IT entrepreneurs
realized that it was strategically no longer viable to combine both software development and IT
systems implementation projects in one business. “Each of these two business models requires a
different culture, different management principles, different economic control mechanisms, a
different strategy, different scaling, and a different marketing approach. The two business models
are completely different,” explained one of the founders [I3-A]. Consequently, based on this
insight, the entrepreneurial team decided to focus all efforts on the project management side and
aligned the business model accordingly.
In many (albeit not all) cases, trigger points were not isolated events but just the culmination
points of phases in which adaptive tension was built up. External enablers that foster the buildup
of adaptive tension include, for example, the emergence of new market trends (e.g., the well-
ness trend in the hotel industry in cases H3-A and H7-A), growing demand in specific market
segments (e.g., demand increases in the premium segment for interior design in case T7-A),
changing customer requirements (e.g., new technological requirements for traffic safety sys-
tems in case I1-A), declining markets (e.g., a decrease in the average number of overnight stays
in the regional tourism industry in case H5-A), new demand from international markets (e.g., in
case I7-C), or increasing competitive pressure (e.g., in case I8-A, where the entrepreneurs
actively searched for a new niche for applying their firm’s technology in a less crowded market
space).
In line with McKelvey’s (2016) argument, we did not only observe an increase in adaptive
tension based on external forces. Internal changes—especially changes in entrepreneurial
goals—can also play an important role in this context. One entrepreneur in the timber-processing
industry, for example, aspired to change and optimize the firm’s operations as a consequence of
the dissatisfaction with current working conditions for employees [T5-B]). Another major force
that contributes to the buildup of adaptive tension is the entrepreneurial desire to improve a
firm’s competitive positioning (especially the goal to focus on a specific market niche, e.g. in
leaps T1-A, T7-A, H1-B, H2-A, I3-A, I5-B, I8-A). Further examples of internal changes that
contribute to the buildup of adaptive tensions include new employees with new know-how and
capabilities (e.g., H3-A), educational activities of the entrepreneur (e.g., H5-B), quality improve-
ment goals (e.g., H5-A), or innovation activities that gradually lead to a point that allows the firm
to exploit innovations on the market (I1-A, I5-C, I6-B, I6-C).
To summarize, out of the 46 entrepreneurial leaps that we studied, 24 had an opportunity
trigger (concrete customer demand: 19; cooperation opportunity: 3; technological breakthrough:
2) and 22 a distress trigger (strategic distress: 15; organizational distress: 5; financial distress: 2).
In 16 cases, the trigger was preceded by a phase in which adaptive tension was built up primarily
through external enablers, in 11 cases primarily by internal change. 16 leaps were co-determined
(i.e., initiated by a combination of internal and external events and developments). For example,
the owners of H4 decided to invest in expanding the hotel’s spa infrastructure based on increas-
ing customer demand (external enabler) but also because they set a new goal of increasing capac-
ity utilization throughout the year (internal change) [H4-A]. For only 3 out of the 46 entrepreneurial
21
Figure 2. A general process model of the transition phase between dynamic states (“entrepreneurial
leap”; Source: Authors).
leaps, we could not explicitly identify a phase in which adaptive tension was built up before the
trigger point.
The Transition Phase

As we have shown, trigger points are opportunity- or distress-based events and developments
that induce the decision makers to first shift their intentions and subsequently also the focus of
their actions toward changing key elements of the business model. Our data extends this logic by
showing how these entrepreneurs then take the key step into what we call opportunity commit-
ment, which refers to the actual commitment (allocation and use) of resources to induce certain
changes in the firm’s business model with the aim to convert opportunity tension into value. For
example, in some cases, the management invested in building infrastructure, changing structures
and processes, developing new products and services, or enhancing capabilities and skills. In
other cases, resources were committed to reposition the firm and its offerings on the market. In
any case, changing key elements of the business model required managerial resources in terms
of time and attention.
The extent and speed of onset of opportunity commitment differed from case to case. While
in some cases, a considerable amount of resources was committed shortly after the firm had faced
a trigger point (e.g., in the case of a transition from craft production to industrial production [T5-
B]), other cases show a more gradually increasing opportunity commitment path (e.g., taking one
step after the other in technology and product development, finding new partners, and establish-
ing new marketing and sales processes in case I1-A).
Opportunity commitment is usually the first step of the transition phase that we refer to as an
entrepreneurial leap. In Figure 2, we present a general process model that describes the whole
transition phase between dynamic states as observed in our case examples.
In addition to opportunity commitment, we also identified changes in key elements of the
business model. In combination, these changes opened access to new market potential and cre-
ated additional value that the firms were then also able to capture (e.g., in the form of better
business results or competitive advantage). The additional value that the firms captured often
also reinforced opportunity commitment. As the positive effects of the early business model
changes became evident, further resources were invested in changing and consolidating the new
Sternad
value creation system or further enhancement of the value proposition. This reinforcing mecha-
nism is represented by the dotted arrow between “new market potential” and “opportunity com-
mitment” in Figure 2.
In one example, T3-A, a severe illness in the entrepreneurial family was the (distress) trigger.
Resources were then committed to repositioning the firm toward offering healthy and ecologi-
cally friendly homes. For this purpose, it was necessary to first develop more sophisticated build-
ing technologies. The entrepreneurial family decided to invest into building R&D capabilities,
developing a new insulation solution without the use of unhealthy materials, setting up a new
partner network, and implementing a strong innovation culture. The new capabilities allowed the
company to offer ecological buildings for health-conscious customers. The new unique position-
ing as a vendor of healthy buildings opened access to a completely new market segment and led
to considerably higher price levels and margins, which were again reinvested in new building
designs that allowed the company to stay highly competitive in this market niche. In another
example, a small joinery transformed itself into a luxury interior design firm. Triggered by a
financial emergency situation (bankruptcy of a key customer in the traditional joinery business)
and fueled by entrepreneurial aspirations to enter the premium market segment, the entrepreneur
first hired a qualified team, acquired interior design know-how, built infrastructure (e.g., setting
up a showroom in a premium location), and introduced a professional project management struc-
ture [T7-A]. The newly acquired competencies allowed the firm to offer luxury interior designs
for a wealthy target group, thus yielding considerably higher margins and profits, which were
again reinvested in extending the firm’s capabilities to offer premium interior design solutions on
international markets.
These examples include all the elements of an entrepreneurial leap as described in Figure 2.
Internal changes and/or external enablers contribute to the buildup of adaptive tension that is
released at a trigger point where the focus of entrepreneurial action is redirected toward changing
key elements of the business model. The new entrepreneurial focus materializes in the actual
commitment of resources that leads to business model innovation. The modified business model
allows the firm to tap into new market segments, and the value that is created in these segments
is then used for further increasing opportunity commitment until a new equilibrium is reached in
which the business model again attains a dynamic fit with the new market potential.
In contrast to trigger points and changes in the business model, distinct stabilization points at
which new dynamic states arise are quite difficult to determine precisely. Stabilization seems to
work more like a process that spans a certain period of time—a process that restores the dynamic
balance between internal intentions and commitment, resources, structures, and systems and
environmental opportunities, thus leading to a new dynamic state. We therefore prefer the term
“stabilization phase” (rather than “stabilization point”) for the period in which a transition phase
is coming to an end and a new dynamic state emerges.
Patterns of Transition Processes

In addition to identifying the content of entrepreneurial leaps (i.e., giving an answer to the ques-
tion of what exactly changes in a transition phase between dynamic states), we also investigated
the transition phase from a process perspective. Specifically, we tried to map how changes in
value creation, value proposition, and value capture systems unfold over time. Thus, we took a
closer look at what is happening in the “business model innovation” step in the transition phase
between dynamic states (Figure 2). From an aggregated analysis of the sequence of changes in
the business model (see the “process pattern” and “condensed pattern” columns in Table 2), we
were able to identify four main patterns of transition phases that we repeatedly observed when
we analyzed how entrepreneurial leaps unfold (Figure 3).
23
Figure 3. A typology of patterns of entrepreneurial leaps (Source: Authors).
Type A, which we call the “capabilities building” pattern, starts with the commitment to
change the internal value creation system, for example through building new capabilities, using
new technologies, forming new partnerships, and designing or following new processes (Clauss,
2017). Only when adequate resources are acquired, structures, processes, and systems are
adapted, and infrastructure and technological capabilities are built, can the firm proceed to creat-
ing a new value proposition. There are many examples in the hotel business, where investments
into the accommodation, catering, and customer experience (e.g., spa and wellness) infrastruc-
ture had to be made before being able to offer enhanced services (we actually observed this pat-
tern in at least one entrepreneurial leap in all hotels that we investigated). However, we could
also find this pattern in the two other industries. One example is a timber-processing firm [T1-A]
that developed new machines and technological solutions, which allowed it to offer superior
product quality. That, in turn, enabled the entrepreneur to position the company in the premium
segment of the market. Overall, 28 of all 46 transition phases that we investigated in the three
industries followed the Type A pattern.
In Type B, which we call the “reference project” pattern, the management of a firm commits
to enhancing the value proposition before actually making the changes in the value creation sys-
tem that enable the firm to deliver the promised value proposition. The changes in the value
creation system are then made “just in time,” that is, right at the time when they are needed to
Sternad
enable the firm to implement the new value proposition. The typical example for this pattern is a
reference project. For example, one firm in our sample [T2-A] surprisingly won a tender for the
interior design of a flagship museum in Italy. It did not, however, have all the resources and
capabilities to implement this project at the time when the tender was won. Changes in the value
creation system in the form of building know-how, modernizing the manufacturing system, and
developing cooperative relationships with a network of architects were only made after the ten-
der for the reference project had been won (i.e., during the project implementation phase). “We
needed a very high level of know-how in different materials and technologies,” said the compa-
ny’s CEO. “To build the interior design of the museum, we needed glass, lighting technology,
alarm technology, and a lot of knowledge about materials.” [T2-A]. The company acquired this
know-how not before but during the work on the reference project, and the new expertise opened
completely new markets for them (in the museum and luxury retail sectors). In another example,
a timber construction firm [T8-B], which had primarily been regionally active before, won the
tender for building a design center for a leading British car brand under the condition of being
able to adhere to a maximum construction time of six months. The capabilities and reputation
that the company built in the course of this reference project opened the door to international
markets. “This [project] gave us incredible competence, and afterwards, no-one asked anymore
whether we are able to do it” is how the company’s CEO described the market-opening effect of
the reference project. The type B pattern is not limited to actual reference projects, however. In
another case, a hotel entrepreneur [H6-A] first committed to position his hotel in a specific niche
(as a hotel for a wellness-seeking clientele), and only then gradually built further capabilities
(including a cooperation with an association of wellness hotels) that allowed the hotel to deliver
the value that the new positioning promised. Out of the 46 leaps that we studied, five could be
classified as Type B leaps.
In Type C, which we call the “internal optimization” pattern, transition processes revolve
exclusively around changes in the internal value creation system. The value creation innovation
allows the firm to access and exploit new market potential without any further intentional changes
of the value proposition and value capture mechanisms of the business model. For example, a
producer of low-energy buildings acquired new manufacturing know-how and transformed its
production processes from craft to industrial manufacturing [T5-B]. The firm reached a new
level of production efficiency and capacity use, thus considerably increasing the firm’s ability to
gain access to broader market potential due to the lower production costs, although the core value
proposition for the customers did not change. “The first two years were a learning phase, and we
were not more productive with the new [industrial] production than with the craft production
before,” said the company’s CEO [T5-B]. After the learning phase, however, revenues and mar-
gins significantly improved, and the company was also prepared to access new, international
markets. In another example, a supplier of RFID measurement and test solutions [I6-B] acquired
know-how in series production and subsequently changed its manufacturing processes. The
more cost-efficient production opened access to new market potential on international markets,
again without actually making substantial changes in the product or service offerings for custom-
ers (except for lower price levels). Only 2 out of the 46 leaps could be classified as Type C leaps.
Finally, we could also observe a fourth pattern, Type D, the “business logic change” pattern.
In this pattern, elements in all three core dimensions of a business model—the value creation
system, the value proposition, and the value capture mechanism—are adapted. One example is a
printing technology company that experienced financial difficulties in the crisis year 2008. Faced
with competitive pressures, the management perceived a need to focus and sharpen the market
position of the company: “What is our real product? Who are the customers? It is the cosmetics
industry now, but originally, we addressed all sorts of customers. It took us a few years to pin-
point these product-market combinations,” said the CEO of the firm about the beginning of leap
25
I8-A. Based on a new printing technology (printing of enzymes), the company developed a com-
pletely new solution for cosmetics testing. The new capabilities that were acquired through R&D
activities (value creation innovation) allowed the company to offer a new, innovative product to
a new niche market, the cosmetics industry (value proposition innovation). This also enabled the
company to fundamentally change its revenue model from being paid for printing services to
becoming a provider of solutions (value capture innovation), thus completely transforming its
business logic. “There’s no other company in the world that is able to offer such solutions” is how
the CEO described the outcome of the entrepreneurial leap [I8-A]. In another example, the man-
agement of an IT firm perceived a need to better manage its extensive internal knowledge base:
“We wanted to reach a higher level […], which meant to create completely new forms of learning
in which our employees could learn exactly in the way that they wanted. […] We hired a sociol-
ogist who designed these interactive learning environments” [I3-C]. In addition, the company
developed new competency models and knowledge management systems. The value creation
innovation allowed the company to extend its value proposition, as both the new knowledge and
the learning environment were subsequently also offered to customers. New revenue streams
were generated as a consequence, enabling the company to access completely new market poten-
tial: “We have founded an academy in which we also offer further training in customer projects
and for the employees of our customers” [I3-C]. 11 out of the 46 leaps could be classified as Type
D leaps.
In each industry, we identified three different patterns (types A, B, and D in the hotel industry,
A, C, and D in the IIPT industry, and A, B, and C in the timber industry). In 14 out of 24 cases,
we could identify more than one entrepreneurial leap. In only five of these cases [T2, H1, I2, I4,
I5], all the leaps in one company followed the same pattern (e.g., only Type A patterns). In nine
cases [T5, T8, H5, H6, I1, I3, I6, I7, I8], the entrepreneurial leaps followed two different patterns.
The sequence of leaps also differed widely (e.g., B – B – B for T2, A – B for T8, D – A – A for
H5, B – A – A for H6, A – A – A for I5, or D – C – D for I6). Thus, we found support for the idea
that instead of going through a predetermined and predictable sequence of growth stages, firms—
even in the same industry—follow very different development paths.
Discussion
In their comprehensive review of research on firm growth, McKelvie and Wiklund (2010)’s
called for more research on “how” firms grow instead of just focusing on “how much” they grow.
At the same time, they also highlight the potential value of case studies for studying different
types of growth processes (McKelvie & Wiklund, 2010). With our multiple case study-based
research, we provide a new perspective on how firms grow and evolve. We did not observe pre-
determined and predictable sequences of growth stages as proposed in traditional stage models
of firm growth. Instead, we found that firms build the basis for growth (in terms of generating
access to and subsequently exploiting new market potential) in transition phases, which we call
“entrepreneurial leaps.” The cases that we studied revealed that these leaps generally unfold in
the following way:
1. They are initiated at trigger points where newly arising opportunities (e.g., a technological
breakthrough, a cooperation opportunity, or concrete new customer demand) or “painful”
situations in which firms face financial, organizational, or strategic distress induce entre-
preneurs (or managers) to shift the focus of their entrepreneurial intentions and actions
from maintaining a fit between the firm’s current business model and the existing market
potential to changing key elements of the business model of their firm.
Sternad
2. Instead of being isolated events, trigger points are often preceded by a phase in which
adaptive tension is built up as external enablers (e.g., gradually changing customer re-
quirements or growing demand in certain market segments) and/or internal change (e.g.,
innovation activities) result in the firm moving away from a dynamic state equilibrium.
3. The changed entrepreneurial focus manifests itself in opportunity commitment, the deliber-
ate allocation of resources to reconfiguring key elements of the business model in either the
value creation, value proposition, or value capture dimension, or a combination of these
dimensions.
4. The reconfigured business model allows the firm to access new market potential. The value
that is captured through tapping into the new market potential can be used to reinforce op-
portunity commitment, thus allowing the firm to further adapt its business model in order
to better exploit the new market potential.
5. In a stabilization phase, the new business model reaches a good fit with the new market
potential, enabling the firm to capture the value that can be created in the new market niche
in an optimal way. In this phase, the focus of entrepreneurial action again shifts back to
maintaining the fit between the new business model and the new market potential.
We also found some variation within this general process model of entrepreneurial leaps in terms
of which dimensions of the business model are in the focus of entrepreneurial change endeavors
and in which order these dimensions are changed (Figure 3).
With our process model and typology of entrepreneurial leaps, we make several contributions
to the entrepreneurship literature. First, we complement Levie and Lichtenstein’s (2010) dynamic
states model and provide an answer to the question of what is actually going on in the “black
box” of the transition phase between dynamic states. We thereby also respond to Levie and
Lichtenstein’s (2010) call for empirical work on when and how dynamic states change and
address the criticism of Zupic and Giudici (2017), who pointed out that “Levie and Lichtenstein
(2010) laid the foundations for the dynamic states approach in a very abstract and general way”
and called for further work to “focus on elaborating on these and specifying the details in partic-
ular contexts” (p. 202). As we can assume that firms create the basis for growth between at least
as much as within dynamic states, uncovering the processes that are going on within these tran-
sition phases are an important building block for enhancing our understanding of firm growth as
a development process. The combination of dynamic states and entrepreneurial leaps can actu-
ally be used as a general framework for explaining nonlinear growth processes in firms. Our
empirical results also confirm that instead of following predetermined patterns, firms can evolve
through an alternation of dynamic states and different types of entrepreneurial leaps, which do
not follow a fixed and largely predicable sequence.
Delmar et al. (2003), who also provide empirical evidence for a wide variety of different pat-
terns of firm growth, concluded that we should stop “pretend[ing] that growth is a simple and
unidimensional phenomenon” (p. 212). We believe that using complexity science-based
approaches could potentially help us to better understand the complex phenomenon of growth.
The clear distinction between phases in which adaptive tension is built up and trigger points
where that tension is released through the shift of resource commitments (i.e., the reallocation of
resources to changing key elements of the business model)1 enables a more fine-grained exam-
ination of the forces that contribute to the emergence of entrepreneurial leaps. While the concept
of “opportunity tension” in dynamic states theory primarily focuses on the entrepreneurial desire
or drive to explore and exploit an external opportunity (i.e., the effect of external changes on
internal motivations; Levie & Lichtenstein, 2010; Lichtenstein, 2009), our conceptualization and
empirical findings suggest that it is actually an interplay of a variety of different forces that even-
tually lead to a shift in the focus of entrepreneurial actions: external enablers and internal
27
(organizational) changes that contribute to building up adaptive tension, (pressing) opportunity

or distress that can trigger a swift reorientation of entrepreneurial intentions, and the actual real-
locating of resources and refocusing of entrepreneurial actions that allow a firm to enact an
opportunity.
A clearer differentiation between the factors that contribute to building up adaptive tensions
and the triggers that catalyze a dissipation of these tensions (McKelvey, 2016) could also advance
the nascent research of trigger points or “critical junctures” in a firm growth context (e.g., Brown
& Mawson, 2013; Brown et al., 2017; Vohora et al., 2004). To date, this research has primarily
focused on the actual triggers rather than on the (maybe crucial) role of the internal and external
forces that lead to the buildup of tension that precedes a trigger point. With our work, we high-
light that trigger points are not only starting points of the emergence of the new order but at the
same time also endpoints of a process that gradually moved the firm away from an existing order.
Although we observed the general pattern that adaptive tension is first built up and then
released at trigger points in the majority of our cases, there were some cases of triggers for which
we did not find evidence of a longer preceding period of buildup of adaptive tension.
Notwithstanding the possibility that some prior tension-building developments were just not
recorded in our data, these diverging results could also lead us to the conclusion that there are
differences in the speed of onset of entrepreneurial leaps. While some leaps are preceded by a
longer process of moving away from the dynamic state equilibrium, others are initiated very
rapidly as strong opportunity or distress triggers arise without a longer period of prior buildup of
adaptive tension. These findings could be a potential starting point for studying the temporal
dynamics that underlie the transition between dynamic states (see also George & Jones, 2000;
Mitchell & James, 2001).
With our identification of both opportunity and distress triggers of entrepreneurial leaps, we
also reconcile two streams of the firm growth literature. Some authors focused on the crucial role
of organizational crises in the development of entrepreneurial firms (e.g., Greiner, 1998;
McCarthy, 2003), while much of the newer literature is characterized by an opportunity-focused
perspective on firm growth (as exemplified in the concept of “opportunity tension” in the dynamic
states theory; Levie & Lichtenstein, 2010; Lichtenstein, 2009). The results of our study suggest
that firms neither exclusively grow from crisis to crisis nor from one opportunity to another.
Entrepreneurial leaps can be triggered by crises (distress) as well as by arising opportunities,
which can both influence the growth path of the firm without necessarily following a predeter-
mined sequence.
We make a further theoretical contribution by highlighting the interplay between entrepre-
neurial intentions and business model innovation. Entrepreneurial intentions shift from maintain-
ing a fit between the business model and the existing market potential (in dynamic states) to
deliberately changing key elements of the business model (in entrepreneurial leaps). Growth
processes can thus also be seen as a sequence of changing entrepreneurial intentions regarding
either maintaining or reconfiguring the match between the business model and market potential.
This is also in line with the attention-based view of the firm that suggests that the behavior and
development of a firm are contingent on where key decision makers focus their attention (Joseph
& Wilson, 2018; Ocasio, 1997). Through describing the link between entrepreneurial intentions
(as an antecedent of entrepreneurial leaps), changes in the business model, and reaching new
dynamic states, we also open new connections between the literature on firm growth and busi-
ness model innovation (as an organizational change process). With our identification of different
categories of forces that can contribute to the buildup of adaptive tension (external enablers and
internal change) as well as of triggers of business model changes in entrepreneurial leaps (oppor-
tunity triggers and distress triggers), we provide an empirically founded contribution to closing
Sternad
the research gap on internal and external antecedents of business model innovation that was
recently highlighted by Foss and Saebi (2017).
We also contribute to the literature on business model innovation with our identification of the
four patterns of entrepreneurial leaps (Type A—building capabilities first, and then changing the
value proposition based on the new capabilities; Type B—committing to enhance the value prop-
osition first, and then building the requisite capabilities “just-in-time” when they are needed to
deliver the promised value to customers; Type C—changing the value creation system in a way
that allows the firm to become more productive, which in turn opens access to broader market
potential due to lower production costs; and Type D—creating a new business logic through
making changes in all three dimensions of the business model: value creation, value proposition,
and value capture). The patterns show that there are different pathways to adjust business models
in a way that allows a firm to access and exploit new market potential. This is especially relevant
in the context of established firms, where business model innovation processes usually involve a
series of learning episodes (Berends et al., 2016). The uneven distribution of patterns in our study
(61% type A, 11% B, 4% C, and 24% D) could also be an indication of the prevalence of different
organizational learning mechanisms, with stepwise experiential learning (which we would
expect in Types A, B, and C) possibly being more common than an cognitive search-based learn-
ing that results in an early conceptualization of a completely new business model (which we
would assume to be linked with a change of the overall business logic, that is, with Type D;
Berends et al., 2016). We would therefore also see future research opportunities in linking differ-
ent patterns of entrepreneurial leaps to processes of organizational learning.
The four patterns of entrepreneurial leaps can also have practical relevance for entrepreneurs
who aim to embark their firms on a growth path as they highlight different options for firms to
initiate and implement growth leaps. Entrepreneurs and practicing managers could also benefit
from seeing the development of their firms as an alternation between dynamic states and entre-
preneurial leap, because it enables them to more clearly focus their attention and actions on either
maintaining a fit between the current business model and market potential or reconfiguring the
business model in order to access and exploit new market potential.
Of course, our work is not without limitations. Although we use cases from three countries,
our empirical data is limited to one world region (Central Europe). It is possible that cultural or
institutional differences play a role in determining triggers and configurations of transition phases
between dynamic states. Moreover, it was also difficult to determine objective selection criteria
for the firm sample given the lack of public availability of (financial) data on SMEs in the target
region. We therefore decided to rely on the assessment of 15 industry experts, which, of course,
may include a certain degree of subjectivity. We additionally tried to overcome this challenge by
subsequently conducting a thorough case-by-case analysis (based on our qualitative data) that
allowed us to identify the entrepreneurial leaps, which we then used as the basis for our further
analysis. Another challenge was to exactly determine what actually classifies as an entrepreneur-
ial leap. Although in all cases, we asked three interview partners for a detailed account of the
biggest qualitative development steps of their firms and although the case data were always
interpreted by at least two researchers in order to minimize researcher bias, we could not avoid
that some degree of judgment is still involved in determining which development steps eventu-
ally qualified as entrepreneurial leaps, especially also due to the fact the we had to rely on retro-
spective accounts of our key informants.
Despite these limitations of our study, we believe that our research can contribute to taking a
step forward in gaining a more comprehensive understanding of how firms develop in transition
phases between different dynamic states. Our findings could also form the basis for further
research on entrepreneurial leaps. For example, follow-up studies could explore the social and
political processes that lead to opportunity commitment at the beginning of a transition phase, or
29
the degree to which value that is created and captured during an entrepreneurial leap is already
used to further fuel the transition process within the same leap. The potential role of (experien-
tial) learning from entrepreneurial leaps for facilitating the initiation and implementation of fur-
ther entrepreneurial leaps could be a further interesting research focus. Digging deeper, future
research could also explore the challenges that different patterns of entrepreneurial leaps entail
for entrepreneurs and their firms and the factors that influence the ability of a firm to capture
value in different types of entrepreneurial leaps.
As Johnson et al. (2008) noticed, different strategic circumstances could also require or foster
different approaches to business model innovation. Although in the limited sample of our quali-
tative study, we could not find clear patterns that link certain types of adaptive tension, triggers,
or other situational factors and different types of entrepreneurial leaps (with the notable excep-
tion that all Type B leaps in our study were preceded by opportunity triggers), further studies
could help to reveal such relationships. For example, quantitative follow-up studies could focus
more on the link between a shifting competitive situation or changing customer needs and certain
patterns of business model innovation in entrepreneurial leaps (Johnson et al., 2008).
Finally, although we were able to collect and analyze quite detailed information on the content
and processes of the initiating phase of entrepreneurial leaps and the patterns through which
entrepreneurial leaps unfold, there is also still room for further research on the stabilization phase
that lies between an entrepreneurial leap and reaching a new dynamic state.
Conclusion
To conclude, our study provides empirical evidence that firm growth is a nonlinear, multidimen-
sional phenomenon that can neither be reduced to a series of predefined steps nor to a purely
quantitative perspective that focuses mainly on growth in size. Entrepreneurs use a wide variety
of different approaches to change the value creation system, value proposition, and value capture
mechanisms of their firms in order to access new market potential and influence the growth pat-
terns of their firm through (re)focusing their intentions, actions, and (resource) commitment to
new opportunities.
With our conceptualization of entrepreneurial leaps, we provide a new processual perspective
on studying the phenomenon of firm growth. Our general process model of the transition phase
between dynamic states allows us to analyze the external and internal forces that contribute to the
onset of growth phases as well as the changes in entrepreneurial intentions, resource commit-
ments, and entrepreneurial actions with their effects on both the business model and the outcome
for the firm in an integrated way. Penrose (1959) argued that firms grow through developing new
configurations of resources and capabilities in order to create value in what she called a “produc-
tive opportunity” (p. 31). New configurations of resources and capabilities are created through
the change of the business model in an entrepreneurial leap, and new productive opportunities
are exploited through opening access to new market potential. Growth thereby does not neces-
sarily need to manifest itself in commonly used quantitative measures like sales, profits, or num-
ber of employees (McKelvie & Wiklund, 2010). Our cases provide evidence for the notion that
firm growth is more than just “a question of more or less,” but can also be about becoming “a
difference in kind” (Hjorth et al., 2015, p. 603).
In her work on firm growth, Penrose (1959) strongly focused on external opportunities,
resources and capabilities, knowledge, and adjustment costs. We complement this work by point-
ing out the role of adaptive tension and distress triggers (in addition to opportunity triggers) as
initiating forces of growth leaps, entrepreneurial intentions, opportunity commitment, and entre-
preneurial actions that are oriented toward reconfiguring a firm’s business model as manifesta-
tions of entrepreneurial agency. In combination, Penrose’s theory and the joint dynamic states
Sternad
and entrepreneurial leaps perspective could be used for studying the initiation, process, and out-
comes of firm growth in a more integrated way on different levels (the entrepreneurial level, the
firm level, and the level of the environment). Thus, we also follow McKelvie and Wiklund’s
(2010) call to build on and extend Penrose’s growth theory in the process dimension, and provide
a proposal of how this seminal work can be complemented by newer complexity science-based
approaches to studying the phenomenon of firm growth.
Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or
publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.
ORCID ID
Dietmar Sternad https://orcid.org/0000-0003-1141-6100
Note
1. We owe credit for making us aware of this distinction to one of our anonymous reviewers.
References
Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes,
50(2), 179–211. https://doi.org/10.1016/0749-5978(91)90020-T
Anderson, P., Meyer, A., Eisenhardt, K., Carley, K., & Pettigrew, A. (1999). Introduction to the special
issue: Applications of complexity theory to organization science. Organization Science, 10(3), 233–
236. https://doi.org/10.1287/orsc.10.3.233
Baden-Fuller, C., & Mangematin, V. (2013). Business models: A challenging agenda. Strategic Organiza-
tion, 11(4), 418–427. https://doi.org/10.1177/1476127013510112
Berends, H., Smits, A., Reymen, I., & Podoynitsyna, K. (2016). Learning while (re)configuring: Business
model innovation processes in established firms. Strategic Organization, 14(3), 181–219. https://doi.
org/10.1177/1476127016632758
Brown, R., & Mawson, S. (2013). Trigger points and high-growth firms: A conceptualisation and review
of public policy implications. Journal of Small Business and Enterprise Development, 20(2),
279–295.
Brown, R., Mawson, S., & Mason, C. (2017). Myth-busting and entrepreneurship policy: The case of high
growth firms. Entrepreneurship & Regional Development, 29(5-6), 414–443. https://doi.org/10.1080/
08985626.2017.1291762
Clauss, T. (2017). Measuring business model innovation: Conceptualization, scale development, and proof
of performance. R&D Management, 47(3), 385–403.
Creswell, J. W., & Poth, C. N. (2017). Qualitative Inquiry and Research Design: Choosing Among Five
Approaches (4th ed.). SAGE Publications.
Delmar, F., Davidsson, P., & Gartner, W. B. (2003). Arriving at the high-growth firm. Journal of Business
Venturing, 18(2), 189–216. https://doi.org/10.1016/S0883-9026(02)00080-0
Eisenhardt, K. M. (1989). Building theories from case study research. Academy of Management Review,
14(4), 532–550. https://doi.org/10.5465/amr.1989.4308385
Eisenhardt, K. M., & Graebner, M. E. (2007). Theory building from cases: Opportunities and challenges.
Academy of Management Journal, 50(1), 25–32. https://doi.org/10.5465/amj.2007.24160888
31
Eisenhardt, K. M., Graebner, M. E., & Sonenshein, S. (2016). Grand challenges and inductive methods:
Rigor without rigor mortis. Academy of Management Journal, 59(4), 1113–1123. https://doi.org/10.
5465/amj.2016.4004
Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: How far have we
come, and where should we go? Journal of Management, 43(1), 200–227.
Garnsey, E., Stam, E., & Heffernan, P. (2006). New firm growth: Exploring processes and paths. Industry
and Innovation, 13(1), 1–20. https://doi.org/10.1080/13662710500513367
George, G., & Bock, A. J. (2011). The business model in practice and its implications for entrepreneurship
research. Entrepreneurship Theory and Practice, 35(1), 83–111. https://doi.org/10.1111/j.1540-6520.
2010.00424.x
George, J. M., & Jones, G. R. (2000). The role of time in theory and theory building. Journal of Manage-
ment, 26(4), 657–684. https://doi.org/10.1177/014920630002600404
Gersick, C. J. (1991). Revolutionary change theories: A multilevel exploration of the punctuated equi-
librium paradigm. Academy of Management Review, 16(1), 10–36. https://doi.org/10.5465/amr.1991.
4278988
Greiner, L. E. (1972). Evolution and revolution as organizations grow. Harvard Business Review, 76(3),
37–46.
Hacklin, F., Björkdahl, J., & Wallin, M. W. (2018). Strategies for business model innovation: How firms
reel in migrating value. Long Range Planning, 51(1), 82–110. https://doi.org/10.1016/j.lrp.2017.06.
009
Hannah, D. P., & Eisenhardt, K. M. (2018). How firms navigate cooperation and competition in nascent
ecosystems. Strategic Management Journal, 39(12), 3163–3192. https://doi.org/10.1002/smj.2750
Hansen, B., & Hamilton, R. T. (2011). Factors distinguishing small firm growers and non-growers. Inter-
national Small Business Journal: Researching Entrepreneurship, 29(3), 278–294. https://doi.org/10.
1177/0266242610381846
Harbermann, H., & Schuilte, R. (2017). Analyzing non-linear dynamics of organic growth: Evidence from
small German new ventures. Journal of Small Business Strategy, 27(2), 36–64.
Hjorth, D., Holt, R., & Steyaert, C. (2015). Entrepreneurship and process studies. International Small Business
Journal: Researching Entrepreneurship, 33(6), 599–611. https://doi.org/10.1177/0266242615583566
Huber, G. P., & Power, D. J. (1985). Retrospective reports of strategic-level managers: Guidelines for
increasing their accuracy. Strategic Management Journal, 6(2), 171–180. https://doi.org/10.1002/smj.
4250060206
Ingley, C., Khlif, W., & Karoui, L. (2017). SME growth trajectories, transitions and board role portfolios: A
critical review and integrative model. International Small Business Journal, 35(6), 729–750.
Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing your business model. Harvard
Business Review, 86(12), 57–68.
Joseph, J., & Wilson, A. J. (2018). The growth of the firm: An attention‐based view. Strategic Management
Journal, 39(6), 1779–1800. https://doi.org/10.1002/smj.2715
Kautonen, T., van Gelderen, M., & Fink, M. (2015). Robustness of the theory of planned behavior in pre-
dicting entrepreneurial intentions and actions. Entrepreneurship Theory and Practice, 39(3), 655–674.
https://doi.org/10.1111/etap.12056
Kautonen, T., van Gelderen, M., & Tornikoski, E. T. (2013). Predicting entrepreneurial behaviour: A test
of the theory of planned behaviour. Applied Economics, 45(6), 697–707. https://doi.org/10.1080/
00036846.2011.610750
Krueger, N. F., & Carsrud, A. L. (1993). Entrepreneurial intentions: Applying the theory of planned
behaviour. Entrepreneurship & Regional Development, 5(4), 315–330. https://doi.org/10.1080/
08985629300000020
Krueger, N. F., Reilly, M. D., & Carsrud, A. L. (2000). Competing models of entrepreneurial intentions.
Journal of Business Venturing, 15(5-6), 411–432. https://doi.org/10.1016/S0883-9026(98)00033-0
Sternad
Levie, J., & Lichtenstein, B. B. (2010). A terminal assessment of stages theory: Introducing a dynamic
states approach to entrepreneurship. Entrepreneurship Theory and Practice, 34(2), 317–350. https://
doi.org/10.1111/j.1540-6520.2010.00377.x
Lichtenstein, B. B. (2016). Emergence and emergents in entrepreneurship: Complexity science insights
into new venture creation. Entrepreneurship Research Journal, 6(1), 43–52. https://doi.org/10.1515/
erj-2015-0052
Lichtenstein, B. B. (2009). Moving from far-from-equilibrium: Opportunity tension as the catalyst of emer-
gence. Emergence: Complexity & Organization, 11(4), 15–25.
Lichtenstein, B. B. (2014). Generative Emergence: A New Discipline of Organizational, Entrepreneurial,
and Social Innovation. Oxford.
Lichtenstein, B. B., Carter, N. M., Dooley, K. J., & Gartner, W. B. (2007). Complexity dynamics of nascent
entrepreneurship. Journal of Business Venturing, 22(2), 236–261. https://doi.org/10.1016/j.jbusvent.
2006.06.001
Lichtenstein, B. B., Dooley, K. J., & Lumpkin, G. T. (2006). Measuring emergence in the dynamics of new
venture creation. Journal of Business Venturing, 21(2), 153–175. https://doi.org/10.1016/j.jbusvent.
2005.04.002
McCarthy, B. (2003). Strategy is personality‐driven, strategy is crisis‐driven: Insights from entrepreneurial
firms. Management Decision, 41(4), 327–339. https://doi.org/10.1108/00251740310468081
McKelvey, B. (2004). Toward a complexity science of entrepreneurship. Journal of Business Venturing,
19(3), 313–341. https://doi.org/10.1016/S0883-9026(03)00034-X
McKelvey, B. (2016). Complexity ingredients required for entrepreneurial success. Entrepreneurship
Research Journal, 6(1), 53–73. https://doi.org/10.1515/erj-2015-0053
McKelvie, A., & Wiklund, J. (2010). Advancing firm growth research: A focus on growth mode instead of
growth rate. Entrepreneurship Theory and Practice, 34(2), 261–288. https://doi.org/10.1111/j.1540-
6520.2010.00375.x
McMullen, J. S., & Dimov, D. (2013). Time and the entrepreneurial journey: The problems and promise of
studying entrepreneurship as a process. Journal of Management Studies, 10(8), n/a–1512. https://doi.
org/10.1111/joms.12049
Miles, M. B., Huberman, A. M., & Saldana, J. (2014). Qualitative Data Analysis (3rd ed). SAGE
Publications.
Mitchell, T. R., & James, L. R. (2001). Building better theory: Time and the specification of when things
happen. Academy of Management Review, 26(4), 530–547. https://doi.org/10.5465/amr.2001.5393889
Ocasio, W. (1997). Towards an attention‐based view of the firm. Strategic Management Journal, 18(S1),
187–206. https://doi.org/10.1002/(SICI)1097-0266(199707)18:1+<187::AID-SMJ936>3.3.CO;2-B
Penrose, E. (1959). The Theory of the Growth of the Firm. Oxford.
Phelps, R., Adams, R., & Bessant, J. (2007). Life cycles of growing organizations: A review with implica-
tions for knowledge and learning. International Journal of Management Reviews, 9(1), 1–30. https://
doi.org/10.1111/j.1468-2370.2007.00200.x
Plowman, D. A., Baker, L. T., Beck, T. E., Kulkarni, M., Solansky, S. T., & Travis, D. V. (2007). Radi-
cal change accidentally: The emergence and amplification of small change. Academy of Management
Journal, 50(3), 515–543. https://doi.org/10.5465/amj.2007.25525647
Prigogine, I. (1955). Introduction to Thermodynamics of Irreversible Processes. Charles C. Thomas
Publisher.
Prigogine, I., & Stengers, I. (1984). Order Out of Chaos. Bantam Books.
Romanelli, E., & Tushman, M. L. (1994). Organizational transformation as punctuated equilibrium: An
empirical test. Academy of Management Journal, 37(5), 1141–1166.
Saebi, T., Lien, L., & Foss, N. J. (2017). What drives business model adaptation? The impact of opportuni-
ties, threats and strategic orientation. Long Range Planning, 50(5), 567–581. https://doi.org/10.1016/
j.lrp.2016.06.006
33
Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of
Management Review, 25(1), 217–226. https://doi.org/10.5465/amr.2000.2791611
Thompson, E. R. (2009). Individual entrepreneurial intent: Construct clarification and development of an
internationally reliable metric. Entrepreneurship Theory and Practice, 33(3), 669–694. https://doi.org/
10.1111/j.1540-6520.2009.00321.x
Vinnell, R., & Hamilton, R. T. (1999). A historical perspective on small firm development. Entrepreneur-
ship Theory and Practice, 23(4), 5–18. https://doi.org/10.1177/104225879902300401
Vohora, A., Wright, M., & Lockett, A. (2004). Critical junctures in the development of university high-tech
spinout companies. Research Policy, 33(1), 147–175. https://doi.org/10.1016/S0048-7333(03)00107-0
Wiklund, J., & Shepherd, D. (2003). Aspiring for, and achieving growth: The moderating role of resources
and opportunities. Journal of Management Studies, 40(8), 1919–1941. https://doi.org/10.1046/j.1467-
6486.2003.00406.x
Yin, R. K. (2009). Case Study Research: Design and Methods (4th ed). SAGE Publications..
Zott, C., & Amit, R. (2010). Business model design: An activity system perspective. Long Range Planning,
43(2-3), 216–226. https://doi.org/10.1016/j.lrp.2009.07.004
Zupic, I., & Giudici, A. (2017). New venture growth: Current findings and future challenges. In R. Black-
burn, D. De Clercq, & J. Heinonen (Eds.), The SAGE Handbook of small business and entrepreneur-
ship (pp. 191–219). Sage.
Author Biographies
Dietmar Sternad is professor of International Management and program director of the
International Business Management Master’s program at Carinthia University of Applied
Sciences (Fachhochschule Kärnten), Villach, Austria.
Gernot Mödritscher is professor at the University of Klagenfurt (Austria), Department of

Management Control and Strategic Management, vice dean at the Faculty of Management and
Economics, and head of Bachelor, Master and Executive Programs in management.

Foro 1

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Foro 1

Uploaded by

Copyright:

Available Formats

Article

Entrepreneurship Theory and

Entrepreneurial Leaps: Practice

Dietmar Sternad1 and Gernot Mödritscher2

Theoretical Background: Nonlinear Dynamics of Firm Growth

Complexity Science-Based Theoretical Approaches to Firm Growth

What Is an Entrepreneurial Leap—And What Is Not

Sample and Data Collection

Table 1. Overview of Cases (Source: Authors).

Annual turnover Total duration of Number of pages

T3 1896 350 70 Germany Timber processing Timber construction 01:56:52 646

I3 1989 350 24 Germany IIPT Software engineering and 01:47:53 94

I9 2005 Around 50 4.6 (2017 Austria IIPT Software solutions 02:02:52 58

Abbreviation: IIPT = Intelligent information and production technology.

Data Analysis and Theory Building

Value creation innovation Value capture

Value creation innovation Value capture

Value creation innovation Value capture

offerings 5. New market new market

Value creation innovation Value capture

Adaptive Tension and Trigger Points

The Transition Phase

Patterns of Transition Processes

Figure 3. A typology of patterns of entrepreneurial leaps (Source: Authors).

(organizational) changes that contribute to building up adaptive tension, (pressing) opportunity

Declaration of Conflicting Interests

Gernot Mödritscher is professor at the University of Klagenfurt (Austria), Department of

You might also like